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Regional Income Inequality and Convergence Processes in the EU-25

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  • Paas, Tiiu
  • Schlitte, Friso
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    Abstract

    This paper deals with the development of regional income disparities and convergence processes in the countries of the European Union. Overall, 861 regions – mainly at the regional level NUTS-3 – of the EU enlarged in May 2004 are analysed for the period 1995 - 2003. We use the two classical concepts of s – and ß-convergence. Furthermore, spatial econometric methods were applied in order to identify existing spatial interaction and to control effects of spatial autocorrelation. The analyses show that poorer regions mainly situated in the European periphery have tended to grow faster than the relatively rich European core regions. However, this catching-up process has been painfully slow and it has been driven mainly by national factors. Particularly, national growth rates in the new member states have been dominated by very dynamic metropolitan areas that had experienced relatively high income levels already at the outset in 1995. As a consequence, in the course of a general catching-up process, regional disparities within the new member countries have increased. --

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    Bibliographic Info

    Paper provided by Hamburg Institute of International Economics (HWWA) in its series HWWA Discussion Papers with number 355.

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    Date of creation: 2006
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    Handle: RePEc:zbw:hwwadp:355

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    Related research

    Keywords: regional inequality; convergence; EU-25; regional interactions; spatial econometrics;

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    1. Annekatrin Niebuhr & Friso Schlitte, 2004. "Convergence, trade and factor mobility in the European Union — Implications for enlargement and regional policy," Intereconomics: Review of European Economic Policy, Springer, vol. 39(3), pages 167-176, May.
    2. Giuseppe Arbia & Laura De Dominicis & Gianfranco Piras, 2005. "The relationship between Regional Growth and Regional Inequality in EU and transition countries - a Spatial Econometric Approach," ERSA conference papers ersa05p168, European Regional Science Association.
    3. Nazrul Islam, 2003. "What have We Learnt from the Convergence Debate?," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 309-362, 07.
    4. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
    5. BAUMONT, Catherine & ERTUR, Cem & LE GALLO, Julie, 2001. "A Spatial Econometric Analysis of Geographic Spillovers and Growth for European Regions, 1980-1995," LATEC - Document de travail - Economie (1991-2003) 2001-04, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne.
    6. Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
    7. Koenker, Roger & Bassett, Gilbert, Jr, 1982. "Robust Tests for Heteroscedasticity Based on Regression Quantiles," Econometrica, Econometric Society, vol. 50(1), pages 43-61, January.
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    9. Robert J. Barro, 2012. "Inflation and Economic Growth," CEMA Working Papers 568, China Economics and Management Academy, Central University of Finance and Economics.
    10. Bräuninger, Michael & Niebuhr, Annekatrin, 2005. "Agglomeration, Spatial Interaction and Convergence in the EU," HWWA Discussion Papers 322, Hamburg Institute of International Economics (HWWA).
    11. Niebuhr, Annekatrin, 2000. "Convergence and the effects of spatial interaction," HWWA Discussion Papers 110, Hamburg Institute of International Economics (HWWA).
    12. Tondl, Gabriele & Vuksic, Goran, 2003. "What makes regions in Eastern Europe catching up? The role of foreign investment, human resources and geography," ZEI Working Papers B 12-2003, ZEI - Center for European Integration Studies, University of Bonn.
    13. Deininger, K & Squire, L, 1996. "Measuring Income Inequality : A New Data-Base," Papers 537, Harvard - Institute for International Development.
    14. Sergio Rey & Brett Montouri, 1999. "US Regional Income Convergence: A Spatial Econometric Perspective," Regional Studies, Taylor & Francis Journals, vol. 33(2), pages 143-156.
    15. Maria ABREU & Henri L.F. DE GROOT & Raymond J.G.M. FLORAX, 2005. "Space And Growth: A Survey Of Empirical Evidence And Methods," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 21, pages 13-44.
    16. Maria Abreu & Henri L.F. de Groot & Raymond J.G.M. Florax, 2004. "Space and Growth," Tinbergen Institute Discussion Papers 04-129/3, Tinbergen Institute.
    17. Fischer, Manfred M. & Stirböck, Claudia, 2004. "Regional Income Convergence in the Enlarged Europe, 1995-2000: A Spatial Econometric Perspective," ZEW Discussion Papers 04-42, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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    Cited by:
    1. Juliana Dahl, 2013. "Innovation and Growth in Regions with Specific Geographical Features," Kiel Advanced Studies Working Papers 463, Kiel Institute for the World Economy.
    2. Christ, Julian P., 2010. "Geographic concentration and spatial inequality: Two decades of EPO patenting at the level of European micro regions," Violette Reihe Arbeitspapiere 32/2010, Promotionsschwerpunkt "Globalisierung und Beschaeftigung".
    3. George Petrakos & Panagiotis Artelaris, 2009. "European Regional Convergence Revisited: A Weighted Least Squares Approach," Growth and Change, Gatton College of Business and Economics, University of Kentucky, vol. 40(2), pages 314-331.
    4. Eckey, Hans-Friedrich & Türck, Matthias, 2007. "Convergence of EU-Regions. A Literature Report," Investigaciones Regionales, Asociación Española de Ciencia Regional, issue 10, pages 5-32.
    5. Schwengler, Barbara, 2013. "Einfluss der europäischen Regionalpolitik auf die deutsche Regionalförderung," IAB Discussion Paper 201318, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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